Harley's Purchase of MV Agusta Finalized

Harley will pay $108 mio. for MV (an unlisted company), which faces $ 69 mio. worth of past dues to banks and suppliers (as I ventured to anounce in an earlier post)

HD CEO Jim Ziemer says: "Our main objective, with this acquisition, is to increase our presence and to reinforce our position of leadership in Europe (...)"

I am not getting it.

Firstly, I don't know how Mr Ziemer would define "a position of leadership". Secondly, MV is a "boutique" player on the European super/hyper sport scene with, basically, ONE maxed-out engine and superb but largely outsourced componentry at high € Prices, with a marginal market share. Thirdly, I just can't fathom why Harley or even Buell customers should be expected to adopt the MV Agusta brand name. Fourthly, I suspect some MV devotees will resent the HD takeover

Jamie

That one made no sense to me either. It's not like they can take advantage of a large network of MV dealers?

Inside dope

HD's confidential market research indicates MV riders have a huge need for conchos, fringed jackets and head bandannas.

fastfreight said:

HD's confidential market research indicates MV riders have a huge need for conchos, fringed jackets and head bandannas.

Click to expand...

Yes...I hear that the Pirate looking is taking Europe by storm.

Jamie:

I'm going to insert in your post body. I apologize if it's hard to read....

Jamie said:

Harley will pay $108 mio. for MV (an unlisted company), which faces $ 69 mio. worth of past dues to banks and suppliers (as I ventured to anounce in an earlier post)

+Are they paying in Euro's or FRN's converted to Euro's. If they are paying in Frn's pre conversion, they are actually buying MV for the outstanding liabilities. If they are paying 108 m Euro, they are idiots. They are inhereting labor problems that make the UAW look pale by comparo.

HD CEO Jim Ziemer says: "Our main objective, with this acquisition, is to increase our presence and to reinforce our position of leadership in Europe (...)"

+I may be wrong, but I always thought HD was a conniseur's bike in Europe. There is, as far as I can ascertain, no leadership in Europe with HD. Maybe Ziemer should have said.....We want to become more that a niche bike seller in the European Union. Consequently our purchase of MV will broaden our horizions.

I am not getting it.

Firstly, I don't know how Mr Ziemer would define "a position of leadership". Secondly, MV is a "boutique" player on the European super/hyper sport scene with, basically, ONE maxed-out engine and superb but largely outsourced componentry at high € Prices, with a marginal market share. Thirdly, I just can't fathom why Harley or even Buell customers should be expected to adopt the MV Agusta brand name. Fourthly, I suspect some MV devotees will resent the HD takeover

Jamie

Click to expand...

There is no way that domestic MV riders (the few that there are) will, in any way, patronize a HD dealership. Potato bikers are potato bikers and will also shun the MV just as the Buell is shunned.

Finally, who is bankrolling the purchase? I was under the imperssion that the majority of HD stockholders were actually HD owners. Was the buyout actually put to the stockholders or is the upper management at HD acting in their 'best interest'. I suspect the latter is the answer.

This is going to be Deja-vu for HD. Sort of like AMF with a bad economy.

I don't get it either, it just doesn't make any sense. It's kind of like when Sears merged with KMart. There is no logical conclusion to this other than the disappearance of MV. Harley bought Holiday Rambler back in the late 80's saying it was a good move because they were both in the recreation business, but things quietly went south and Harley sold it off later. At times Harley seems to be a rudderless ship with no real direstion.

Harley's VROD project was supposed to attract to the younger market, and it has but not as the projected levels. In a way, H-D is similar to Cadillac, they have to re-invent themselves in order to have a market to sell to.

The forthcoming 50+ crowd wasn't raised on Steppenwolf and Mustangs; we went through our formative years on Heavy Metal and Trans Ams. There will always be folks who enjoy the original H-D look, but the Motor Company needs to find alternative sources of inspiration to command the profit margins they are accustomed to.

There's nothing wrong with high profit margins, as long as there is a market happy to pay it. So if a Porsche-engineered vtwin doesn't inspire the mob, a 90-degree Italian beast might.

If there were a Ducati dealer close by, I'd be riding one. If Buells start sporting MV engines, that is almost the next best thing ... After Buell sheds the crazy-looking body styles.

Flip, HD's acquisition cost is indeed € 70 mio, later translated @ $ 108 mio.

Incidentally, on the top of the list of things that don't jive about it, it's a makeshift takeover. What HD was really after, about a couple of years ago, was KTM. Motorcyclist (have forgotten which issue) even featured a two-page interview with both parties with all the usual buzz words (synergy, integration, optimization, strategy, complementarity, globalization, etc.). Then the story goes that KTM chose to retain its independance...

How is the acquisition financed? HD happened to sit on a pile of cash (it does not spend much on in-house engineering R&D, does it? ) or so-callled "free cash flow". One alternative, of course, would have been to reward shareholders, many of them being company workers and retirees, for their loyalty, particularly in the face of a declining stock price and disappointing 2nd QTR '08 results . If I were still owning HD shares, I, for one, would feel short-changed.

BTW, Matt Levatich, former Head of HD European Operations, has just been elevated to the position of MV Agusta CEO. Let's wish him good luck.

Jamie

I wish Harley luck, but I don't get it either??
Didn't know they were the leader of the motorcycle market in Europe.

webmaster said:

Harley's VROD project was supposed to attract to the younger market, and it has but not as the projected levels. In a way, H-D is similar to Cadillac, they have to re-invent themselves in order to have a market to sell to.

The forthcoming 50+ crowd wasn't raised on Steppenwolf and Mustangs; we went through our formative years on Heavy Metal and Trans Ams. There will always be folks who enjoy the original H-D look, but the Motor Company needs to find alternative sources of inspiration to command the profit margins they are accustomed to.

There's nothing wrong with high profit margins, as long as there is a market happy to pay it. So if a Porsche-engineered vtwin doesn't inspire the mob, a 90-degree Italian beast might.

If there were a Ducati dealer close by, I'd be riding one. If Buells start sporting MV engines, that is almost the next best thing ... After Buell sheds the crazy-looking body styles.

Click to expand...

Shawn:

I don't see Erik Buell warming up to the MV power plant. It would require a radical frame change for one thing. Besides, isn't Erik going the Rotax route?

Granted, HD has to do something with it's V-twin. The legions of V-twin aficionados are passing on. There are a select few of the younger crowd who want a V-twin (I know one that went from a Ninja to a Duce) but that's not the norm. I've looked inside a few HD engines. It's all 30 year old engineering from the crank to the chain primary with a nylon take up block, nothing but archaic but reliable to a point. That point is performance. That's why there is so many aftermarket suppliers that specialize in HD performance items. What HD has going for it is that unique sound and the MV power plant won't make that unique sound. How is Willie G going to market a bike that sounds nothing like what people want (or perceive they want) to hear?

It will be interesting. One thing that is certain is that HD has an urgent need to reinvent it's Cadillac as you say. That need gets more urgent with each passing day and more stringent EPA mandates.

In my opinion, HD would have been better off designing an engine that would meet upcoming EPA requirements and offer more performance and reliability here on American soil rather than acquiring MV. I believe that would have been more palatable to it's stockholders and customers rather than bringing in an alien manufacturer and trying to dovetail that manufacturer into it's operations.